Chris Lee, head of travel, BarclaysThere has been a great deal of talk of late about the difficult market conditions and whether or not there will be a recession. The level of financial activity within the travel sector, however, is strong.

As I predicted in Travel Weekly nine months or so ago, the demise of the vast majority of ATOL bonds in favour of the ATOL Protection Contribution has produced a flurry of merger and acquisition activity as bank credit lines, previously taken up by bonds, have been put to new use.

I am aware of a number of such deals being pursued at the moment across a number of travel companies of varying sizes. There is also plenty of evidence of such lending capacity being used to fund organic growth.

For example, Gold Medal has just announced it has arranged a war chest facility of £38 million to fund possible future acquisitions and organic growth, while the Air Travel Trust recently raised £60 million in bank funding to assist with the replacement of the majority of ATOL bonds with the APC levy.

The merger of the big four into the big two appears to be successful so far with the travel sector now represented within the FTSE 100. The number of Alternative Investment Market and Plus Market-listed companies is also expanding with the likes of Travelzest, Western and Oriental, All Leisure Group, and Alpha Prospects all listing over the last couple of years.

Venture capital and private equity firms are active in travel at present and companies such as Travel Republic feature prominently in the Sunday Times Fast Track list of growing businesses, while Flight Centre is in the 100 Best Companies to Work For list.

The cruise sector is also trading at high sales levels with passengers from the UK set to hit record numbers, even if the price of fuel is causing pressure on margins.